Asian markets fall on Spain bailout fears

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Asian markets fall on Spain bailout fears

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Asian markets sank Wednesday on growing concerns that Spain could be forced into seeking a bailout.

30 May,2012 09:07 am

Meanwhile, China dashed previous hopes it will introduce fresh stimulus measures to boost its economy.The euro also set new two-year lows against the dollar as attention turned away from positive news from Greece at the weekend that had provided some lift earlier this week.Tokyo fell 0.98 percent by the break, Hong Kong tumbled 2.17 percent, Sydney was 0.94 percent, Shanghai slipped 0.22 percent and Seoul was 0.97 percent lower.The losses reversed two days of gains after opinion polls in Greece on Sunday pointed to a victory for the pro-austerity conservatives in June 17 elections, easing concerns the country could end up leaving the euro bloc.But Madrids economic woes are now in focus as its borrowing rates approached the 7.0 percent mark considered unsustainable for governments to service their debts.Economists fear that if yields stay so high the government will have to seek an international bailout -- following Greece, Ireland and Portugal -- despite assurances from Prime Minister Mariano Rajoy that it would not need to.Adding to traders woes was a European Central Bank warning that it would oppose any plan by Spain to tap its lending facilities in order to recapitalise the countrys ailing Bankia, which has asked for $24 billion in state aid.Spain already this month paid $5.6 billion to the lender to take it into government control and thelatest plea from its board comes as the nations own finances are stretched to breaking point.While officials say they are only considering the ECB as a last resort, the Frankfurt-based banks governing council is set against it, the Wall Street Journal said.There is this ongoing concern about the Spanish banking system and what kind of bailout it could need, Tim Waterer, senior trader at CMC Markets in Sydney, told Dow Jones Newswires.Spains woes weighed on the single currency, which fell to another low not seen since July 2010. The troubled unit bought $1.2460 and 99.13 yen in Tokyo, down from $1.2503 and 99.39 yen in New York on Tuesday.The dollar was stable at 79.51 yen, compared with 79.49 yen.Regional markets, particularly Hong Kong and Shanghai, also slipped after an editorial by Chinas state run Xinhua news agency saying Beijing would not embark on a stimulus drive like that seen during the 2008 financial crisis.The news countered a Tuesday report in the state-run Shanghai Securities News that measures would be introduced to jumpstart demand for automobiles, fuelling hopes for similar moves in other sectors.Traders were unmoved by a Wall Street rally that saw the Dow up 1.01 percent, the S&P 500 gain 1.11 percent and the Nasdaq climb 1.18 percent.On oil markets New Yorks main contract, West Texas Intermediate crude for delivery in July was down 20 cents to $90.56 per barrel while Brent North Sea crude for July shed 34 cents to $106.34.Gold was at $1,547.00 an ounce at 0400 GMT, compared with $1,573.60 late Tuesday.